Power Exchanges in India

Power exchange ?• A Power exchange facilitates equitable,

transparent and efficient trading of power.

• Bridges the demand supply mismatch by

bringing larger players together for buying and

selling in an auction based system.

• While maintaining complete anonymity, resolves

the constraints in the earlier formats, Viz. search

costs, asymmetric information, transaction

costs, and counter-party risks.

Open Access- collective transactions

“collective transaction” means a set of transactions discovered in power exchange

Scheduling and open access for collective transactions discovered in a power exchange through anonymous simultaneous competitive bidding by buyers and sellers, presently on day-ahead basis.

Open Access- collective transactions• The ATC declaration is to be done by NLDC on its web site

every day.

• Depending on the corridor availabilities the solution is to

be found out and the allowed trades will be intimated to

NLDC.

• If there is no congestion NLDC will accept the trades and

issue the schedules to the power exchange and the same

will be implemented in RLDC schedules.

• In Power Exchange transactions both buyer and seller

have to pay the Transmission and operating charges

separately.

• The transmission losses also have to be borne by the

buyer and seller separately.

Features of Px• Nationwide, Online and Electronic platform • Voluntary participation. • Neutral, Unbiased and Transparent • Offer Day-Ahead Market(DAM) • Exchange time-line consistent with time-line

of Load Despatch Centres • Activities of the Exchange will be carried out

in accordance with the – “CERC (Open Access in inter-State

Transmission) Regulations, 2008”, dated 25.01.2008,

– Procedure for scheduling of collective transaction issued by the Central Transmission Utility (PGCIL)

– Bye-Laws, Rules and Business Rules of the Exchange.

Benefits of Px• Transparency: – Px offers a transparent, national-level platform for trading electricity in India leading to

a vibrant power market.  • Access a diversified portfolio:

– Px offers a broader choice to generators and distribution licensees at the national-level so that they can trade in smaller quantities and smaller number of hours without additional overheads.

• Payment security: – Px stand in as the counter-party for all trades; so participants need not be concerned

about the risk-profile of the other party.     

• Minimal transaction overheads/charges:– All charges are displayed on the Px trading terminals; so there is no room for

negotiation. The cost of transactions through Px is much less than any other mode of transaction.

• Efficient portfolio management:– Px enables participants to precisely adjust their portfolio as a function of consumption

or generation. Participants, especially distribution licensees, are enabled to precisely manage their consumption and generation pattern.   

• Hedging UI risks:– Px provides a tool to hedge against adverse movements in electricity prices. Thus,

price risks are minimised. • Market development:

– Px has plans to launch a range of products to facilitate development of power markets in India in such a way that investment in capacity enhancement is encouraged.   

• Price discovery would be through double side bidding and buyers and suppliers shall pay/receive uniform price.

• double side closed auction

– Bid accumulation period (Bidding phase) 10.00 AM and will end at 12.00 Noon During the auction sessions on each Trading Day, bids entered by Members on the IEX Trading Platform are automatically stored in the Central Order Book without giving rise to Contracts. During this phase, bids entered can be revised or cancelled.

– Auction periodAt the end of the bidding session, the IEX Trading Platform will seek to match bids for each hourly contract. After the price determination phase is concluded, the Members, whose bids have been partially or fully executed, will be provided all relevant trade information regarding each contract traded on the IEX Trading Platform.

Price Determination Process (Provisional)All purchase bids and sale offers will be aggregated in the unconstrained scenario. The aggregate supply and demand curves will be drawn on Price-Quantity axes. The intersection point of the two curves will give Market Clearing Price (MCP) and Market Clearing Volume (MCV) corresponding to price and quantity of the intersection point. Results from the process will be preliminary results. Based on these results the Exchange will work out provisional obligation and provisional power flow. Funds available in the settlement account of the Members shall be checked with the Clearing Banks and also requisition for capacity allocation shall be sent to the NLDC. In case sufficient funds are not available in the settlement account of the Member then his bid (s) will be deleted from further evaluation procedure.

Price Determination Process (Final)Based on the transmission capacity reserved for the Exchange by the NLDC on day ahead basis by 2.00 PM, fresh iteration shall be run at 2.30 PM and final Market Clearing Price and Volume as well as Area Clearing Price and Volume shall be determined. These Area Clearing Prices shall be used for settlement of the contracts.

SettlementOn receipt of final results, obligations shall be sent to Banks for Pay In from buying Members at 2.30 PM and will take confirmation of the same from the Bank. At 3.00 PM final results will be sent to NLDC / SLDCs for incorporating in final schedules. Once a transaction is scheduled it shall be considered as deemed delivery.

Time table

  TRADING DAY

  Time Action

1) 10AM-12 PM

Participants submit Bid to IEX for purchase /sale of electricity on next day.

2) 11:00 AM NLDC communicates to IEX the list of interfaces/control areas/regional transmission system(s) on which unconstrained flows are required

3) 1:00 PM IEX communicates to NLDC the interchange on various interfaces/control areas/regional transmission systems as intimated by NLDC

4) 2:00 PM In case of Congestion,NLDC communicates to IEX the period of congestion & available limit for scheduling on respective interfaces/control areas/transmission system(s)

5) 3:00 PM IEX submits application for scheduling of Collective Transaction6) 4:00 PM NLDC sends the details(scheduling request of Collective Transaction) to all

the concerned RLDCs 7) 5:30 PM NLDC /RLDCs shall confirm the accepted schedule to IEX8) 6:00 PM RLDC issues schedule

IEX Day-Ahead Market Timeline for Actual Delivery of Power on Next Day

congestion management• Market-splitting methodology shall be adopted for congestion

management.

Grid bottlenecks are relieved by comparison of the calculated contractual flow with the transmission capacity available for spot trading, and if the flow exceeds the capacity, the prices are adjusted on both sides of the bottleneck so that the flow equals the capacity. If the flow does not exceed the capacity, a common price is established for the whole area.

• If the flow exceeds the capacity at the common price for the whole market area, it is split in a surplus part and a deficit part. The price is reduced in the surplus area (sale > purchase) and increased in the deficit area (purchase > sale). This will reduce the sale and increase the purchase in the surplus area. In the same way, it will reduce the purchase and increase the sale in the deficit area. Thus, the needed flow is reduced to match the available transfer capability. This method of managing congestion is also known as market-splitting. Initially, the electrical regions are defined as bid areas since inter-regional links are most likely to be congested, however, each electrical region of the country has been divided in two bid-areas so as to accommodate any exigencies of congestion in intra-regional transmission system.

Px (Indian Energy Exchange)• 27th June 2008

• promoted by Financial Technologies -Multi Commodity Exchange of India Ltd (MCX),

• co-promoters – PTC India Ltd – IDFC, – Adani Enterprises,– Reliance Energy, – Lanco Infratech, – Rural Electrification Corporation (REC), – Tata Power Company.

Power Exchange India Limited (PXI), • 22nd October 2008.

• promoted by NSE & National Commodities & Derivatives Exchange Ltd (NCDEX).

• co-promoters – Power Finance Corporation, – Gujarat Urja Vikas Nigam, – JSW Energy, – GMR Energy, – Jindal Steel & Power

Some basics

•   Market Volume Profile   

•   Market Clearing Price   

•    Market Clearing Volume  

•   Unconstrained Report

Future • Proposal to offer products for different

time horizons institution. • Proposal to add variety in terms of

– products offered and – method of bid-matching process

• Evolve corresponding – rules,– bye-laws for clearing, – settlement, – margins,– deposits, – market surveillance etc.

Treatment of Congestion Revenue

• The area prices shall differ in each region after splitting the market. The Members in different bid areas shall pay different area prices. The funds collected due to differential in area prices shall be kept in separate fund. These funds will be utilized as directed by CERC.

Day-Ahead Market hourly contract specifications:-

Product definition

24 separate hour periods throughout the following delivery day (D).

Trading system IEX /PEX (Leased Line)

When to place orders 10:00 AM to 12:00 PM of previous day (D-1)

Fixing times 15:00 hrs of D-1 (dispute settlement period: 30 min.)

Minimum volume 1 MW (Minimum allowable quantity for buy/sell in the

standing clearance, it should not be less than this quantity)

Minimum volume step 0.1 MW

Minimum quotation step Rs. 1 per MWh

Day-Ahead Market hourly contract specifications:-

Quotation method  

Closed auction (Market Clearing Price and Market Clearing Volume calculation) by linear interpolation

Order wording Trader's ID, instrument, quantity/price combination

Delivery pointPeriphery of Regional Transmission System in which the grid-connected

exchange entity, is located.

SettlementDaily settlement at ACP* Volume traded. Final settlement adjusted for any force

majeure deviations.

Transmission charges

Regional Transmission System:As Per Central Electricity Regulatory Commission (Open Access in inter-State Transmission) Regulations, 2008.

Transmission losses

State Transmission System:As per the concerned State Electricity Regulatory Commission’s Regulations/ CERC (Open access) Regulations, 2008.

Hours Delivery Date : 15/12/2008

Buy Bid(MWh) Sell Bid (MWh) MCP (INR/MWh) MCV (MWh)

00:00-01:00 0 150 3750.00 0

01:00-02:00 0 150 3750.00 0

02:00-03:00 0 150 3750.00 0

03:00-04:00 0 150 3750.00 0

04:00-05:00 50 150 4500.00 0

05:00-06:00 100 150 4500.00 167

06:00-07:00 50 0 6500.00 0

07:00-08:00 50 0 6500.00 0

08:00-09:00 50 0 6500.00 0

09:00-10:00 50 0 6500.00 0

10:00-11:00 50 0 6500.00 0

11:00-12:00 50 0 6500.00 0

12:00-13:00 50 0 6500.00 0

13:00-14:00 50 0 6500.00 0

14:00-15:00 50 0 6500.00 0

15:00-16:00 50 0 5000.00 0

16:00-17:00 50 0 5000.00 0

17:00-18:00 50 0 7000.00 0

18:00-19:00 50 0 7000.00 0

19:00-20:00 50 0 7000.00 0

20:00-21:00 50 150 7050.00 0

21:00-22:00 50 150 7050.00 0

22:00-23:00 50 0 5000.00 0

23:00-00:00 0 0 0.00 0

Total 1000 1200 -- 167